Tuesday, August 11, 2015

Insider Trading Ring Used Hackers for $30 Million in Insider Profits

US government authorities have charged nine people with being in a global hacking and insider-trading ring, alleging they made $30 million in illegal profits by trading on stolen information from 150,000 press releases before they were made public.

The suspected hackers lived in Ukraine, while others allegedly involved in securities trading resided in the US state of Georgia, according to US authorities. Four additional co-conspirators also lived in Georgia, New York and Pennsylvania. Five of the suspects who live in the US were arrested.

The stolen press release data covered earnings and mergers involving companies such as Hewlett-Packard, Netflix, Delta Air Lines, Boeing, Bank of America, Ford Motor, Honeywell and Viacom, according to one of the indictments.

The suspects allegedly traded ahead of the releases in 800 instances. 

For about five years starting around February 2010, the suspects hacked into the networks of Marketwired, PR Newswire and Business Wire to steal confidential press releases before they were made public, according to one of the indictments.

In one example, Caterpillar was set to announce its third-quarter earnings on October 24 2011 and sent its release to PR Newswire three days before that date. By accessing the release before it was made public, the suspects made a profit of about $648,000.

The suspected hackers are Ivan Turchynov and Oleksander Ieremenko, who both lived in Ukraine. Arkadiy Dubovoy, his son Igor Dubovoy, and relative Pavel Dubovoy allegedly engaged in securities trading and live in Georgia and Ukraine, respectively.

Their alleged co-conspirators, some of whom were broker-dealers registered with the SEC, are Vitaly Korchevsky, Vladislav Khalupsky, Aleksandr Garkusha and Leonid Momotok.

The hackers allegedly used a variety of techniques, including injecting malware, launching spear phishing attacks that involve fake emails, decrypting data in “brute force attacks” and other methods.

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